Change Management - Facing Up To The Horror Of It All

by Stephen Warrilow
(Bristol, UK)

A recent visitor to my website questioned me about the source of the frequently quoted statistic that approximately 70% of all step change (i.e. more than incremental improvement) initiatives fail.

Here is a brief summary of a cross section of sources that I sent her and that reveal the horror of it all.

A global survey conducted in 2008 by McKinsey & Company offered the insight that organisations could only hope to survive by constantly changing but approximately two thirds of all change initiatives fail.

In a recent 'Call for Papers' for the 'Journal of Change Management' (for a special issue entitled) 'Why Does Change Fail and What Can We Do About It?' Professor Bernard Burnes of Manchester Business School makes the following observations:

'Whilst this seems to be a staggeringly high rate of failure, it is not out of line with the rest of the change literature which regularly quotes failure rates of between 60% and 90% (Burnes, 2009).

For example, Bain and Co claim the general failure rate is 70% (Senturia et al, 2008) but that it rises to 90% for culture change initiatives (Rogers et al, 2006)).

In the 1990s, Hammer and Champy (1993) claimed that 70% of all BPR initiatives failed.'

According to 'Research Findings on Program Failure and Success' by Patrick Morley, Ph.D. Chairman and CEO, 'Man in the Mirror':

'Two-thirds of Total Quality Management (TQM) programs fail, and reengineering initiatives fail 70% of the time (Senge, 1999).

Change initiatives crucial to organizational success fail 70% of the time (Miller, 2002)'

A 'Computer Weekly' study (2003) on 421 IT projects revealed the following:

# 16% of all projects successfully completed (that is they were delivered in scope on time and on budget)
# 75% of all projects were 'challenged' in the following ways:
# 35% behind schedule
# 59% over budget
# 54% under-delivered on planned scope

A survey conducted by the Standish Group (2003)showed that 66% of IT projects are either totally abandoned or fail against a measure of budget, scope, time or quality (i.e. ?challenged?).

It has been estimated that the cost to US business of failing or abandoned IT projects runs into hundreds of billions of dollars.

Closer to home, the UK Labour government have wasted 26 billions of pounds on failed projects. An investigation by 'The Independent' newspaper has found that the total cost of Labour's 10 most notorious IT failures is equivalent to more than half of the budget for Britain's schools in 2009.

The world of mergers and acquisitions fares little better.

The 'value enhancement trend for 10 years of KPMG International's M&A survey' shows that on average only 28% of mergers have resulted in enhanced shareholder value, whilst an average of 36% have led to a reduction in shareholder value. This value assessment is based on company share price movements relative to average industry sector movement during a two-year period.

Read them and weep

If you feel you have the stomach for it here is a selection of articles and reports examining the catalogue of horror that constitutes the lack of ROI and failure statistics and reasons in so many - too many projects and change initiatives:

http://www.bcs.org/content/ConWebD/19584

http://www.umsl.edu/~sauterv/analysis/6840_f03_papers/frese/

http://www2.commerce.virginia.edu/cmit/Research/MISQE%209-05.pdf

http://www2.commerce.virginia.edu/cmit/Research/MISQE%209-05.pdf

http://gbr.pepperdine.edu/2010/08/the-business-impact-of-change-management/

http://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03100-usen-03-making-change-work.pdf

In the film 'Apocalypse Now', the anti-hero Colonel Kurtz mumbles through the closing sequences:

'...the horror... horror has a face... and you must make a friend of horror...'

Any impartial assessment of all of the main types of significant change initiatives reveals the sheer horror of the colossal human and financial wastage perpetrated by organisational and political leaders.

The knowledge of how to successfully lead and manage change is out there in the public domain in a growing body of easily accessible work.

So it must be an appalling combination of ignorance and arrogance that causes the organisational and political leaders who preside over this litany of costly failures to be so desperately under-prepared as they embark on further change initiatives.

Or has the marginal rate of increase in change now largely overtaken many organisational leaders' capacity to deal with it?

What do you think?